UK to launch world’s first renminbi bond outside China

Britain stepped up its bid to become a leading trading partner with China on Friday with the launch of the world's first offshore renminbi government bond.

"The government is taking these steps in recognition of the increasingly prominent role that renminbi is playing in the global economy and financial markets, including as a potential future reserve currency," said Chancellor of the Exchequer George Osborne at the end of a China-U.K. investment summit held in London.

STR | AFP | Getty Images

Containers waiting to be transported in Qingdao port in Qingdao, east China's Shandong province.

The deal is expected to launch within the next few weeks or months and proceeds will be used to finance the U.K. foreign currency reserves.

"The bond is intended to be a one-off issuance, with the benefit of contributing liquidity to the small but fast-growing renminbi offshore market and attracting other market players in both the private and official sectors," said Osborne.

The summit was co-hosted by Osborne and Chinese Vice-Premier Ma Kai and resulted in over £2.4 billion ($3.9 billion) in commercial deals being struck between Britain and China.

It came as China works to internationalize its currency and the U.K. competes to be China's main trading hub in Europe. The U.K. is already one of Europe's largest investors in China, and among the largest destinations in Europe for China's outward investment. It has set an ambitious target of doubling overall exports to £1 trillion by 2020 and hopes that China trade will be a large contributor.

Earlier this week, China's largest commercial bank announced it was opening a branch in London. The Industrial and Commercial Bank of China (ICBC) will be the first mainland-Chinese bank to open a branch in the U.K. since 1949. It is hoped the move will help further business and trade between the two countries.

Other deals struck during Ma's visit include a £10 million deal to ship thoroughbred and jump horses to China. Reciprocal measures were also agreed to open up financial markets, with Lloyds of London to open a Beijing branch and China's Harvest Fund Management to apply to establish a company in London.

The U.K. also announced measures to make it easier for Chinese tourists to visit the country, including streamlining the visa process and making it easier for British airports to be used as hubs for international travel.

Other European countries are also wooing China—including France, to which Ma heads directly after his U.K. visit. He will meet with newly installed French Finance Minister Michel Sapin at an economic and finance conference.

During the U.K. visit, reporters attempted to question Chinese delegates on next week's Scottish independence referendum, which is proving closer than previously expected.

According to Reuters, China's vice minister for finance, Zhu Guangyao, responded: "On the referendum, this is the domestic affairs of the U.K. For foreign investors were look forward to a stable investment environment. A sound investment environment is the very basis to attract foreign investment."